The Senate Finance Committee this morning formally introduced draft Medicare reform legislation that offers equal prescription drug coverage to all beneficiaries.
In a departure from a proposal by President Bush to offer richer drug benefits to seniors who enroll in private plans, the measure engineered by committee Chairman Charles Grassley (R-Iowa) and ranking member Max Baucus (D-Mont.) would allow all seniors, starting in 2006, to purchase the same standard drug coverage with a $275 annual deductible.
The Finance Committee proposal does include creation of a new managed care option that Bush has touted strongly. Called MedicareAdvantage, the option would be similar to PPOs that are widely available in the private insurance industry.
All drug coverage would be provided by either Medicare Prescription Drug Plans or MedicareAdvantage Plans.
Under the committee proposal, beneficiaries and the government would share drug costs on a 50-50 basis between amounts of $276 and $3,450. There would be a gap of no governmental coverage between $3,450 and $3,700, and beneficiaries would pay 10% of costs over $3,700. Individuals with incomes below 160% of the poverty level would receive additional assistance.
It would cost an estimated $200 billion over 10 years to cover the gap between $3,450 and $3,700, according to a committee staffer, and the committee is trying to stay within the $400 billion budget approved by Congress. The Congressional Budget Office has said the bill for the proposed Senate package would come in under the $400 billion over 10 years budgeted by Bush and Congress.
The measure also would standardize Medicare payment for acute care services, paying rural hospitals based on the amount large urban hospitals receive. The legislation would make permanent a temporary 1.6% payment increase for rural and small urban hospitals enacted by Congress last year. Additionally, the U.S. General Accounting Office would be required to study geographic differences in payment for physicians' services.
With preliminary White House support for the compromise and a House Republican outline that also is moving toward equal drug coverage, the chances for passage of a comprehensive Medicare prescription drug bill appear higher than in recent years.
The Senate Finance Committee has scheduled a vote on the legislation for Thursday. Senate Majority Leader Bill Frist, M.D., (R-Tenn.) has said he will bring the measure to the Senate floor June 16 and seeks passage of a bill before the July 4 recess.